accounting standards and related legal documents. Only then will the information used for analysis be accurate and meaningful.
* Industry average index system
Enterprises want high-quality financial analysis results that effectively serve the decisions of business administrators. Analysts must compare the financial indicators of the enterprise with the industry average indicator system or the financial indicators of a comparable enterprise in the same industry. In other words, this is an important source of data, serving as a reference for analyzing and evaluating the financial situation of the enterprise.
2.2. Financial report analysis of ACC-244 Joint Stock Company
This is an important source of data, serving as a reference for analysis and assessment of the Company's financial situation. In order to obtain high quality financial analysis results, serving the decisions of managers, within the scope of this thesis, the author will compare the financial indicators of ACC-244 Joint Stock Company with a similar company in the same industry and region, which is Construction and Engineering Investment Joint Stock Company 29.
Company name: Construction and Engineering Investment Joint Stock Company 29 Business type: Joint Stock Company
Address: No. 73 Nguyen Trai, Khuong Trung Ward, Thanh Xuan District, Hanoi Tax code: 0105879162
Charter capital: 50,000,000,000 VND
Years of experience in construction: 44 years
2.2.1. General assessment of the financial situation of the enterprise at ACC-244 Joint Stock Company
General assessment of the financial situation of the enterprise to make initial preliminary assessment of the financial status of the enterprise. Thereby, the
Managers grasp the level of financial independence and the difficulties the business is facing.
2.2.1.1. General assessment of the asset situation at ACC-244 Joint Stock Company
Table 2.1. General assessment of the Company's asset situation
Unit: VND
Indicators
End of the year | Difference | |||||||||||
2017 | 2018 | 2019 | End of 2019 compared to 2017 | End of 2019 compared to 2018 | ||||||||
Amount | Proportion (%) | Amount | Proportion (%) | Amount | Proportion (%) | Amount | Rate (%) | Proportion (%) | Amount | Rate (%) | Proportion (%) | |
1. Current assets | 338,534,711,476 | 99.55 | 263,511,961,583 | 99.39 | 319.877.846.253 | 98.60 | -18,656,865,223 | -5.51 | -0.95 | 56,365,884,670 | 21.39 | -0.79 |
2. Long-term assets | 1,518,842,720 | 0.45 | 1,617,270,516 | 0.61 | 4,537,086,498 | 1.40 | 3,018,243,778 | 198.72 | 0.95 | 2,919,815,982 | 180.54 | 0.79 |
3. TOTAL ASSETS (3)=(1)+(2) | 340,053,554,196 | 100 | 265.129.232.099 | 100 | 324,414,932,751 | 100 | -15,638,621,445 | 193.21 | 59.285.700.652 | 201.93 | ||
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The data in Table 2.1 show:
(Data source: Financial report of ACC-244 Joint Stock Company)
The Company's assets have decreased gradually over the years, specifically: total assets at the end of 2019 were VND 324,414,932,751, a decrease of VND 15,638 million compared to 2017, equivalent to a decrease of 3.69% and an increase of VND 59,285 million compared to 2018, or an increase of 30.86%.
Short-term assets at the end of 2019 compared to 2017 decreased by VND 18,656 million, equivalent to a decrease of 5.51%; and compared to the end of 2018, in 2019, short-term assets increased to VND 56,365 million, or an increase of 21.39%. The Company's short-term assets account for a very large proportion of the Company's total assets (from 99.55% at the end of 2017 to 99.39% at the end of 2018 and 98.60% at the end of 2019), which is understandable for a construction company because assets are largely concentrated in receivables from customers and inventories. But this also shows the Company's current situation of being quite capital occupied.
Long-term assets at the end of 2019 compared to 2017 increased by 3,018 million VND, equivalent to an increase of 198.72%; compared to 2018, long-term assets at the end of 2019 increased by 2,919 million VND, or an increase of 180.54%.
This is a positive change showing that the Company has focused more on long-term asset investment. Purchasing more machinery and equipment to serve the construction of the Company's large projects.
2.2.1.2. General assessment of capital situation at ACC-244 Joint Stock Company
General assessment of the capital mobilization situation of enterprises shows the results of capital mobilization in terms of scale and influencing causes, assesses the reasonableness of the mobilization structure, capital mobilization and organization policies as well as the fluctuation trend of the mobilized capital structure.
Table 2.2. General assessment of the Company's capital situation
Unit: VND
Target
End of the year | Difference | |||||||||||
2017 | 2018 | 2019 | End of 2019 vs 2017 | End of 2019 compared to last year 2018 | ||||||||
Amount | Proportion (%) | Amount | Proportion (%) | Amount | Proportion (%) | Amount | Rate (%) | Proportion (%) | Amount | Rate (%) | Proportion (%) | |
1. Liabilities pay | 297.262.331.121 | 87.42 | 220.081.169.158 | 83.01 | 277.147.908.308 | 85.43 | -20,114,422,813 | -6.77 | -1.99 | 57,066,739,150 | 25.93 | 2.42 |
2. Equity | 42,791,223,075 | 12.58 | 45,048,062,941 | 16.99 | 47.267.024.443 | 14.57 | 4,475,801,368 | 10.46 | 1.99 | 2,218,961,502 | 4.93 | -2.42 |
3. TOTAL CAPITAL (3)=(1)+(2) | 340,053,554,196 | 100 | 265.129.232.099 | 100 | 324,414,932,751 | 100 | -15,638,621,445 | 3.69 | 59.285.700.652 | 30.86 | ||
From table 2.2 shows:
(Data source: Financial report of ACC-244 Joint Stock Company)
The Company's total capital has decreased gradually over the years, specifically: at the end of 2019, it decreased compared to 2017 by 15,638 million VND, equivalent to a decrease rate of 3.69%; however, compared to 2018, the total capital increased by 59,285 million VND or 30.86%.
Owner's equity at the end of 2019 increased by 4,476 million VND compared to 2017, equivalent to an increase of 10.46%; compared to 2018, it increased by 2,219 million VND or
increased by 4.93%. The proportion of equity in total capital increased (from 12.58% at the end of 2017 to 16.99% at the end of 2018 and 14.57% at the end of 2019). This demonstrates the increased level of financial autonomy and independence of the Company.
Meanwhile, liabilities have decreased gradually over the years (from 87.42% at the end of 2017 to 83.01% at the end of 2018 and 85.43% at the end of 2019), but still account for a very high proportion of the Company's total capital. In general, the Company is mobilizing more capital from outside than from within. This shows that the Company wants to expand its scale but its own capital is scarce, so it needs more funding from outside.
2.2.1.3. General assessment of debt situation at ACC-244 Joint Stock Company
A general assessment of a company's solvency indicates whether the company's financial situation is good or bad. To generally assess solvency, the table analyzes the following independent indicators:
Table 2.3: General assessment of the Company's solvency
Unit: VND
Target
End of the year | Difference | ||||||
2017 | 2018 | 2019 | 2019/2017 | 2019/2018 | |||
± | % | ± | % | ||||
1. Total assets | 340,053,554,196 | 265.129.232.099 | 324,414,932,751 | -15,638,621,445 | -4.60 | 59.285.700.652 | 22.36 |
2. Total liabilities | 297.262.331.121 | 220.081.169.158 | 277.147.908.308 | -20,114,422,813 | -6.77 | 57,066,739,150 | 25.93 |
3. Current assets | 338,534,711,476 | 263,511,961,583 | 319.877.846.253 | -18,656,865,223 | -5.51 | 56,365,884,670 | 21.39 |
4. Total short-term debt | 297.262.331.121 | 220.081.169.158 | 275.906.608.308 | -21,355,722,813 | -7.18 | 55,825,439,150 | 25.37 |
5. Cash and cash equivalents cash equivalent | 63,870,786,619 | 38,399,617,355 | 29,330,915,711 | -34,539,870,908 | -54.08 | -9,068,701,644 | -23.62 |
6. General solvency ratio (times) (6)=(1)/(2) | 1.14 | 1.20 | 1.17 | 0.03 | 2.33 | -0.03 | -2.83 |
7. Instantaneous solvency ratio (times) (7)=(5)/(4) | 0.21 | 0.17 | 0.11 | -0.11 | -50.52 | -0.07 | -39.07 |
(Data source: Financial report of ACC-244 Joint Stock Company)
From Table 2.3, the Company's solvency can be summarized as follows:
Regarding general solvency: at all times the value of the indicator is greater than 1 and has little fluctuation over the years. At the end of 2017 it was 1.14.
times; 2018 was 1.20 times and the end of 2019 was 1.17 times. This value shows that the Company has the ability to pay its debts.
Regarding the ability to pay immediately: This indicator uses cash and cash equivalents to be ready to pay the Company's due debts. The value of this indicator is low (less than 1) and fluctuates over time. It can be seen that the Company's ability to pay immediately in the 3 years is very low, below 0.5. Specifically, at the end of 2017 it was 0.21 times; in 2018 it was 0.17 times; and at the end of 2019 it was 0.11 times. This shows that the Company may have difficulty in paying debts, in urgent times, short-term receivables and other short-term assets are difficult to quickly convert to cash to promptly meet due debts.
2.2.1.4. General assessment of business performance at ACC-244 Joint Stock Company
The Company's profitability is an indicator reflecting the level of profit that the Company earns per unit of cost. Profitability is the highest and most concentrated expression of the Company's business efficiency. To evaluate the Company's profitability in general, the analysis table is prepared as follows:
Table 2.4: General assessment of the Company's profitability
Unit: VND
Target
End of the year | Difference | ||||||
2017 | 2018 | 2019 | 2019/2017 | 2019/2018 | |||
± | % | ± | % | ||||
1. Profit after tax | 9,970,384,054 | 8,877,626,218 | 8,735,996,940 | -1,234,387,114 | -12.38 | -141,629,278 | -1.60 |
2. Average equity | 41,699,104,855 | 43,919,643,008 | 46,196,672,091 | 4,497,567,236 | 10.79 | 2,277,029,083 | 5.18 |
3. Net revenue | 502.608.385.026 | 454.031.325.181 | 435.990.368.816 | -66.618.016.210 | -13.25 | -18,040,956,365 | -3.97 |
4. Average assets | 398.602.834.250 | 302.591.393.148 | 294.692.224.631 | -103.910.609.620 | -26.07 | -7,899,168,517 | -2.61 |
5. Return on Equity (5)=(1)/(2)*100 | 23.91 | 20.21 | 18.91 | -5 | -20.91 | -1.30 | -6.45 |
6. Net revenue profitability (6)=(1)/(3)*100 | 1.98 | 1.96 | 2.00 | 0.02 | 1.01 | 0.05 | 2.48 |
7. Economic profitability of assets (7)=(1)/(4)*100 | 2.50 | 2.93 | 2.96 | 0.46 | 18.51 | 0.03 | 1.04 |
The data table shows:
(Data source: Financial report of ACC-244 Joint Stock Company)
The return on equity in 2019 was 18.91 times, down 5 times compared to 2017, equivalent to a decrease of 20.91%, down 1.3 times compared to 2018 and a decrease rate of 6.45%. The decrease in return on equity shows that the Company is not using capital effectively for business investment.
The profitability of the Company's net revenue in 2019 was 2 times higher than in 2017, 0.02 times higher than in 2017, equivalent to an increase of 1.01%; increased by 0.05 times compared to 2018, and an increase of 2.48%. The profitability of net revenue tends to increase, which proves that the Company's business efficiency is getting better and better.
The economic profitability of the Company's assets in 2019 was 2.96 times, an increase of 0.46 times compared to 2017, equivalent to an increase of 18.51%; an increase of 0.03 times compared to 2018 and a growth rate of 1.04%. The value of the following year is higher than the previous year, proving that the level of management and use of assets has brought high efficiency.
2.2.2. Analysis of asset structure and capital sources at ACC-244 Joint Stock Company
2.2.2.1. Analysis of asset structure at ACC-244 Joint Stock Company
61
Table 2.5: Asset structure analysis
Unit: VND
Asset
End of the year | End of 2019 compared to previous years | |||||||||||
2017 | 2018 | 2019 | 2017 | 2018 | ||||||||
Amount | Proportion (%) | Amount | Proportion (%) | Amount | Proportion (%) | Amount | Rate (%) | Proportion (%) | Amount | Rate (%) | Proportion (%) | |
CURRENT ASSETS | 338,534,711,476 | 99.55 | 263,511,961,583 | 99.39 | 319.877.846.253 | 98.60 | -18,656,865,223 | -5.49 | -0.95 | 56,365,884,670 | 21.26 | -0.79 |
1. Cash and cash equivalents | 63,870,786,619 | 18.78 | 38,399,617,355 | 14.48 | 29,330,915,711 | 9.04 | -34,539,870,908 | -10.16 | -9.74 | -9,068,701,644 | -3.42 | -5.44 |
2. Short-term receivables | 156,962,583,581 | 46.16 | 167.162.600.559 | 63.05 | 236,754,915,217 | 72.98 | 79,792,331,636 | 23.46 | 26.82 | 69,592,314,658 | 26.25 | 9.93 |
3.Inventory | 116.714.185.098 | 34.32 | 55,907,548,615 | 21.09 | 53,792,015,325 | 16.58 | -62,922,169,773 | -18.50 | -17.74 | -2,115,533,290 | -0.80 | -4.51 |
4. Other short-term assets | 987.156.178 | 0.29 | 2,042,195,054 | 0.77 | 0 | 0.00 | -987.156.178 | -0.29 | -0.29 | -2,042,195,054 | -0.77 | -0.77 |
LONG-TERM ASSETS | 1,518,842,720 | 0.45 | 1,617,270,516 | 0.61 | 4,537,086,498 | 1.40 | 3,018,243,778 | 0.89 | 0.95 | 2,919,815,982 | 1.10 | 0.79 |
1. Fixed assets | 1,484,181,673 | 0.44 | 1,585,312,430 | 0.60 | 4,496,285,389 | 1.39 | 3,012,103,716 | 0.89 | 0.95 | 2,910,972,959 | 1.10 | 0.79 |
2. Long-term prepaid expenses | 34,661,047 | 0.01 | 31,958,086 | 0.01 | 40,801,109 | 0.01 | 6,140,062 | 0.002 | 0.002 | 8,843,023 | 0.003 | 0.00 |
TOTAL ASSETS | 340,053,554,196 | 100 | 265.129.232.099 | 100 | 324,414,932,751 | 100 | -15,638,621,445 | -4.60 | 0.00 | 59.285.700.652 | 22.36 | 0.00 |
(Data source: Financial report of ACC-244 Joint Stock Company)
Table 2.5 shows:
The Company's asset size has decreased over the years. At the end of 2019, it was 424,414,932,751 VND compared to 2017, it was 340,053,554,196 VND, a decrease of 15,638,621,445 VND or a decrease of 4.6%; in 2019, compared to 2018, it was 265,129,232,099 VND, an increase of 59,285,700,652 VND or an increase of 22.36%. Total assets decreased mainly due to a decrease in short-term assets, in 2019 compared to 2017, it decreased by 18,656,865,223 VND or 5.49%, in 2019 compared to 2018, although it increased by 56,365,884,670 VND or 21.26%, it was still lower than the total short-term assets of 2017. Long-term assets also increased and increased sharply in 2019; in 2019, it increased by 3,018,243,778 VND compared to 2017, equivalent to an increase of 0.89%, and increased by 2,919,815,982 VND or 1.1% compared to 2018. The reason was due to fluctuations in the following items:
* Short-term assets: In the structure of short-term assets compared to total assets, receivables account for the highest proportion.
Cash and cash equivalents (mainly cash) decreased year by year. In 2017, the amount of cash and cash equivalents was worth VND 63,870,786,619 (accounting for 18.78%) of total assets, but in 2018, the amount of cash and cash equivalents was worth VND 38,399,617,355 (accounting for 14.48%), down VND 34,539,870,908 or down 10.16%; and in 2019, it continued to decrease to VND 29,330,915,711 (accounting for 9.04%), down VND 9,068,701,644 or down 3.42% compared to 2018. In general, the Company maintains a good amount of cash, ensuring favorable payment ability. Because the general trend of increasing cash is considered not good, if the amount of cash in the fund is quite large, it will reduce the Company's ability to turn over capital.
Short-term receivables are the value of assets that the Company has been appropriated by other units (receivables, customer receivables, advances to employees, receivables according to construction contract progress schedule).